Services are crucial to the EU economy. They account for over 70% of the EU’s GDP and an equal share of its employment. The European Commission aims to remove barriers for companies looking to offer cross-border services and to make it easier for them to do business.

Core principles of the Single Market for services

The core principles governing the Single Market for services are:

the freedom to establish a company in another EU country (Article 49 TFEU)

the freedom to provide or receive services in an EU country other than the one where the company or consumer is established (Article 56 TFEU).

Services Directive

The application of the core principles have been developed through the case law of the European Court of Justice. This case law was codified into EU law with the adoption of the Services Directive in 2006. The Directive covers services activities accounting for 46% of EU GDP, including in sectors like retail, tourism, construction and business services. It is not limited to services provided between EU countries however and also covers services provided within countries.

Full implementation of the Services Directive should:

remove red tape and simplify the establishment of service providers in their home country and abroad;

simplify the cross-border provision of services into other EU countries;

Professional Qualifications Directive

Sometimes EU countries may make the access to a particular profession conditional upon the possession of a professional qualification traditionally issued within their territory. This represents an obstacle to the core principles of the single market for services as those qualified to practise the same profession in another EU country cannot do so. In response, the EU established rules to facilitate the mutual recognition of professional qualifications between EU countries. This was mainly done through the Professional Qualifications Directive but there are also specific directives for lawyers dealing with establishment in another EU country and the cross-border provision of services.

The Services Package

The Services Package of January 2017 is an ambitious but balanced set of measures that will make it easier for companies and professionals to provide services to a potential customer base of 500 million people in the EU. It will give a boost to the services sector, which accounts for two-thirds of the total EU labour force, that will benefit consumers, jobseekers and businesses, and will generate economic growth across Europe.

The collaborative economy

The collaborative economy, sometimes called the sharing economy, covers a great variety of sectors and is rapidly emerging across Europe. Many people in the EU have already used, or are aware of collaborative economy services, which range from sharing houses and car journeys, to domestic services. The collaborative economy provides new opportunities for citizens and innovative entrepreneurs. But it has also created tensions between the new service providers and existing market operators. The Commission is looking at how we can encourage the development of new and innovative services, and the temporary use of assets, while ensuring adequate consumer and social protection.

The retail and wholesale sector

One of the crucial sectors for the competitiveness of the European economy is the retail and wholesale sector. The European Retail Action Plan (ERAP), adopted in 2013, sets out a strategy to improve competitiveness and to enhance the sector’s economic, environmental and social performance. To further develop the policy in retail, a High Level Group on Retail Competitiveness has been set up to advise the Commission on issues important for the sector, including e-commerce.

Internal Market Information System

National authorities in different countries often need to exchange information to ensure the implementation of single market rules. The European Commission’s Internal Market Information System was created to help these authorities cooperate across borders.

Standardisation in services

Voluntary service standards can benefit service providers and their customers in many ways. Yet service standards account for only 2% of all EU standards. In addition, differing national service standards can make it harder for companies to offer their services across Europe. In its guidance – the Staff Working Document, 'Tapping the potential of European service standards', the Commission is putting forward a number of measures to address these issues.